Ku v Lang

[2024] NZHC 2136

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-4

[2024] NZHC 2136

BETWEEN

JANICE LAN CHUN KU

Plaintiff

AND

YUANHONG LANG

Defendant

Hearing:	15 July 2024
Appearances:	Wendy Andrews for the Plaintiff David K Wilson for the Defendant
Judgment:	1 August 2024

JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR

Application for summary judgment and for orders:

(a) removing a notice of claim; (b) possession of property

This judgment was delivered by me on 1 August 2024 at 3:00pm

pursuant to Rule 11.5 of the High Court Rules

…………………………. Registrar/Deputy Registrar

Solicitors:

Sinisa Law, Otahuhu, Auckland, for the Plaintiff

Loo & Koo (Arthur Loo), Newmarket, Auckland, for the Defendant

Counsel:

Wendy E Andrews, Barrister, Auckland, for the Plaintiff D K Wilson, Barrister, Auckland, for the Defendant

KU v LANG [2024] NZHC 2136 [1 August 2024]

TABLE OF CONTENTS

Paragraph

Background  [2]

Ms Ku’s application for summary judgment  [9]

Ms Lang’s opposition  [12]

Legal principles  [14]

Summary judgments  [14]

Caveats and notices of claim  [17]

Analysis  [22]

Does Ms Lang have a caveatable interest in the Property?	[24]
Contracting-Out Agreement: Mr Lo and Ms Lang	[39]
Conclusion in respect of caveatable interest	[41]
Should the Court exercise its discretion to remove the notice of claim?	[42]
Unlawful occupier	[45]
Conclusion in respect of unlawful occupier	[47]
Result	[50]
Orders	[52]

[1]    Ms  Janice  Lan  Chun  Ku  (Ms  Ku)  seeks  summary  judgment  against  Ms Yuanhong Lang (Ms Lang) for the removal of a notice of claim lodged pursuant to  the  Property  (Relationships)  Act  1976  against  the  title  of  the  property  at  32 Sunderlands Road, Halfmoon Bay, Auckland of which Ms Ku is the registered proprietor (the Property). Ms Ku also seeks a summary judgment order pursuant to Part 13 of the High Court Rules 2016 for possession of the Property.

Background

[2]    Ms Ku has been the registered owner of the Property since  11  June 2004.  Ms Ku was married to Mr Lam Lo (Mr Lo) and lived with him from 1979 to 2002. Their marriage was dissolved in 2006. Ms Lang was the de facto partner of Mr Lo from 2003.

[3]From around 2003, Mr Lo and Ms Lang lived at the Property.

[4]    On 8 November 2005, Ms Lang and Mr Lo signed a property relationship agreement whereby it was agreed that any property owned by the parties prior to their relationship was not matrimonial property, and that all property in Mr Lo’s name as at the date of the agreement was his separate property.

[5]    On 8 December 2022, Ms Lang claimed the Property as being relationship property.

[6]    From August 2023, Mr Lo moved to live with his daughter. Mr Lo now requires care and lives in a retirement home.

[7]In October 2023, Ms Lang returned from China and occupied the Property.

[8]    Ms Ku has requested Ms Lang to move out of the Property but Ms Lang has refused to do so.

Ms Ku’s application for summary judgment

[9]Ms Ku seeks orders under the first cause of action:1

(a)under s 142 of the Land Transfer Act 2017 (the LTA) that the notice of claim registered by Ms Lang under the Property (Relationships) Act 1976 (the PRA) be removed from the title of the Property; and

(b)for costs.

[10]Ms Ku seeks orders under the second cause of action:2

(a)that she is to have possession of the Property under Part 13 of the High Court Rules 2016 (the Rules);

(b)that Ms Lang leave and not occupy the Property; and

(c)for costs.

[11]The grounds on which each order is sought are as follows:3

(a)Ms Lang has no defence to the causes of action set out in the statement of claim.

(b)First cause of action:

(i)On 8 December 2022, Ms Lang registered a claim upon the Property as relationship property.

(ii)Ms Lang has no claim to the Property as relationship property given the Property is in the name of Ms Ku. Ms Lang signed a relationship property agreement on the 8 November 2005 to the effect that she had no claim to the Property.

1 On notice application by plaintiff for summary judgment dated 4 January 2024 at [1].

2 At [1].

3 At [2].

(iii)Ms Lang has no defence to this cause of action.

(c)Second cause of action:

(i)Ms Lang continues to occupy the Property and refuses to leave the Property.

(ii)Ms Lang continues to occupy the Property without Ms Ku’s consent.

(iii)Ms Ku is the registered proprietor who is entitled to exclude all other persons from the land.

(iv)Ms Lang has no defence to this cause of action.

Ms Lang’s opposition

[12]Ms Lang is opposed to the making of all the orders in the application.4

[13]The grounds on which Ms Lang opposes the making of orders are as follows:5

(a)Ms Lang has a valid and sustainable interest in the Property to support her notice of claim. It is an interest claimed by virtue of a de facto relationship with Mr Lo, with him being the beneficial owner of the Property pursuant to a relationship property agreement between Mr Lo and Ms Ku. The Property is the family home of Mr Lo and Ms Lang.

(b)Ms Lang is not an unlawful occupier of the Property.

(c)Ms Lang is entitled to occupy the Property by reason of:

(i)The consent of Mr Lo as a relationship partner and equitable owner.

4 Notice of opposition to application for summary judgment dated 13 March 2024 at [1].

5 At [2].

(ii)Ms Lang’s 21-year relationship with Mr Lo.

(d)Ms Ku has no entitlement to bring this claim, given that the equitable owner is her former spouse. The relationship issues between Ms Ku and Mr Lo do not appear to have ever been formally determined.

(e)The grounds and matters set out in the statement of defence filed by Ms Lang in this proceeding and her affirmation.

Legal principles

Summary judgments

[14]Rule 12.2 of the Rules provide, relevantly:

12.2 Judgment when there is no defence or when no cause of action can succeed

(1)The court may give judgment against a defendant if the plaintiff  satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.

[15]   The relevant principles governing a summary judgment application are well established:6

The principles are well settled. The question on a summary judgment application is whether Ms Lang has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA). The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, Ms Lang will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 at 341 (PC). In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).

6      Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].

[16]The wording of r 12.2 (“may give judgment”) indicates a residual discretion.

Having regard to the various authorities, the position appears to be as follows:7

(a)The discretion implied by the use of the word “may” is to be restrictively applied. In a great majority of cases, once the court is satisfied the defendant has no defence, there is no room for the exercise of discretion.

(b)The residual discretion may be invoked to avoid oppression or injustice to the defendant where:

(i)The proceeding involves the actions or possible liability of a third party which is not before the court;

(ii)The proceedings are such that the opportunity should be given to allow discovery or other interlocutory applications to be concluded;

(iii)The circumstances of the case disclose very unusual features, the presence of which leads the court to conclude that the entry of summary judgment would be oppressive or unjust; or

(iv)The combination of complex issues of fact and law justify the dismissal of the application for summary judgment, either as a matter of discretion or because the court cannot be satisfied that the defendant has no defence.

(c)Even where the court is not satisfied that a defence has been made out, in exceptional circumstances the application may be adjourned to allow for other processes to be followed.

Caveats and notices of claim

[17]   Section 42 of the PRA provides that a notice of claim shall have the effect as if it were a caveat against dealings lodged pursuant to s 138 of the LTA and the removal of a notice of claim is subject to the same principles as removal of caveats under s 142 and 143 of the LTA.

[18]   The principles governing the determination of applications to sustain caveats are well-established,8 and apply by analogy to notices of claim. The onus is on the caveator to demonstrate an interest in the land that suffices to support the caveat, and the caveator must demonstrate a reasonably arguable case to support the claimed

7      Andrew Beck and others (eds) McGechan on Procedure (online ed, Thomson Reuters) at [HR12.2.11].

8      See generally Philpott v Noble Investments Ltd [2015] NZCA 342 at [26]. And, for a general statement of the principles, see Wallace v Studio New Zealand Ltd [2021] NZCA 392 at [39]–[41].

interest.9 This means the caveator need not definitively establish their right to the interest.

[19]   The process by which applications to sustain a caveat are determined is ill-suited to resolving disputed factual questions. An order for removal will only be made if it is clear the caveat cannot be maintained — either because there was no valid ground for its lodging in the first place, or because the ground on which it was lodged has now ceased to exist.

[20]   Although the onus of proof lies with the caveator, any conflict between affidavits will generally be resolved in the caveator’s favour.10 This is not to say that the Court is bound to accept uncritically statements in an affidavit that lack precision, are equivocal, inconsistent with the documentary evidence or other statements of the same deponent, or inherently improbable.11

[21]   While the Court retains a residual discretion to remove a caveat or allow it to lapse even if the caveator has a legitimate and caveatable interest, that discretion is to be exercised cautiously. The Court must be completely satisfied removal would not prejudice the caveator’s legitimate interests.12

Analysis

[22]The issues to be determined in this judgment are:

(a)Does Ms Lang have a reasonably arguable caveatable interest in the Property so as to support her notice of claim?

(b)If she does, should the Court exercise its discretion to remove the notice of claim in any event?

9      Botany Land Development Ltd v Auckland Council [2014] NZCA 61 at [24].

10    Bethell v Rickard [2013] NZCA 68 at [22]. See also MacRae v Rapana HC Auckland M633/94, 17 June 1994.

11 Barrett v IBC International Ltd [1995] 3 NZLR 170 (CA) at 175, citing Eng Mee Yong v Letchumanan s/o Velayutham [1980] AC 331 (PC) at 341; and Xie v 126 Waimumu Ltd [2020] NZHC 1109 at [8].

12 Pacific Homes Limited (in rec) v Consolidated Joineries Ltd [1996] 2 NZLR 652 (CA) at 656.

(c)Is Ms Lang an unlawful occupier of the Property?

[23]I deal with each of these issues in turn.

Does Ms Lang have a reasonably arguable caveatable interest in the Property?

[24]The notice of claim records Ms Lang’s interest as follows:

“under the Property (Relationships) Act 1976, an interest is claimed by the Claimant by virtue of a de facto relationship with Lam Lo, the said Lam Lo is the beneficial owner of the Property pursuant to the relationship property Agreement between Lam Lo and Lan Chun Ku, the registered proprietor.”

[25]   Ms Lang’s basis of claim is a de facto relationship with Mr Lo, and Mr Lo’s beneficial interest in the Property under the relationship property agreement entered into between Ms Ku and Mr Lo dated 3 October 2005 (the second s 21A agreement). Under that second 21A agreement:

(a)Ms Ku was to retain as her separate property the property situated at 35 Palm Cress Grove, Highland Park, Auckland, valued at $480,000.

(b)Ms Ku was to transfer to Mr Lo her interest in the Property valued at

$600,000.

(c)Mr Lo would assume liability for the $320,000 owing to the ASB Bank Limited and indemnify Ms Ku from the same.

(d)Mr Lo would obtain consent to transfer the mortgage and obtain a release of Ms Ku from further obligations to pay the mortgage.

(e)Mr Lo would be responsible for all future outgoings in respect of the Property.

(f)Mr Lo would pay the applicant the sum of $20,000 comprising the division of the Property.

[26]   Ms Andrews, for Ms Ku, submits that the second s 21A agreement has been repudiated and cancelled. As a consequence, Mr Lo did not retain any beneficial interest in the Property under the second s 21A agreement. Accordingly, Ms Lang cannot have an interest in the Property through her de facto relationship with Mr Lo.

[27]   Ms Andrews submits that the second s 21A agreement was repudiated or cancelled for the following reasons:

(a)The terms of the second s 21A agreement were never completed. Mr Lo did not take over paying the mortgage in respect of the Property or pay Ms Ku the $20,000 that was due under the agreement, and the Property was not transferred to Mr Lo.

(b)Ms Ku states that there was an oral agreement between her and Mr Lo sometime after signing the second s 21A agreement to the effect that it would not be implemented and Mr Lo could continue living in the Property. However he would have to maintain it and pay expenses such as rates and utilities. Ms Ku says she relied upon Mr Lo’s assurance that they did not need to go back to the lawyers and pay for another written agreement.

(c)Mr Lo applied for a benefit and other Government subsidies including an accommodation allowance. In the application, he stated that he was not working and could not afford to take on the liability of the Property. If Mr Lo owned the Property, he and Ms Lang would not qualify for Government assistance. Mr Lo’s assertion that he had a beneficial interest in the Property is contrary to the application for Government assistance.

(d)Ms Ku has continued to pay the mortgage on the Property and continues to do so presently, in reliance on the understanding that she was the owner of the Property.

[28]   Ms Andrews submits that the evidence before the Court is consistent with an agreement between the parties not to perform the second s 21A agreement—that both parties repudiated it and it was never implemented.

[29]   In support of her submission, Ms Andrews refers to the decision of Anderson v Anderson.13 This case involved Mr Anderson who abandoned his family and his interest in the family home.  Judge  Inglis  had  no  difficulty  in  determining  that Mr Anderson had abandoned all claim to any interest in the relevant  property.14      Ms Andrews submits that the present case falls within the ambit of Anderson v Anderson as Mr Lo positively took steps to waive his entitlement to the Property by repudiating the second s 21A agreement. She submits that his conduct over the next

20 years is consistent with him abandoning/repudiating his rights under that agreement.

[30]   Ms Andrews also refers to the decision in Pearson v Pearson15 where the respondent had vanished and discontinued paying outgoings under a s 21 agreement which required him to pay all the outgoings on the matrimonial home. In that decision, His Honour held that the respondent’s repudiation of his obligation to pay the outgoings of the home entitled the applicant to treat the relevant provision in the agreement that they held the property as tenants in common in equal shares as no longer binding.

[31]   Ms Andrews also refers to the decision in Langer v Prowse16 where Judge Whitehead referred to the Pearson decision with approval and determined that the Court had jurisdiction to determine whether a s 21 agreement was cancelled or not and that the question of cancellation was based on the application of general contract law or equity.

[32]   In summary, Ms Andrews submits that the decisions referred to establish that this Court has jurisdiction to determine whether a s 21A agreement is cancelled. She submits that the parties do not need to apply to set aside an agreement under s 21J of

13     Anderson v Anderson (1985) 1 FRNZ 547.

14     At 549 and 550.

15     Pearson v Pearson (1987) 1 FRNZ 647.

16     Langer v Prowse FC Nelson FP042/216/02, 6 June 2003.

the PRA in circumstances where the application of contract law principles determine whether or not the agreement has been cancelled. She submits that Ms Lang’s argument that the second s 21A agreement is valid and enforceable is untenable, given the passage of time and the conduct of Mr Lo which is consistent with the agreement being cancelled.

[33]   Mr Wilson, for Ms Lang, submits that the fundamental problem with Ms Ku’s argument that the second s 21A agreement has been cancelled is that Mr Lo is not a party to this proceeding. He submits that it would be inappropriate for this Court to make a determination as to the relationship property contractual rights and obligations between Ms Ku and Mr Lo in proceedings in which Mr Lo is not a party.

[34]   In relation to the judgments of Anderson v Anderson and Pearson v Pearson, Mr Wilson does not contend that these decisions are wrongly decided. However, he submits that they are inapplicable to the present situation. He submits that in both those cases the husband was a party to the Family Court proceedings, had a right to be heard, and the Judge was satisfied that the respondents had either been served or had notice of the proceedings but had not taken part. He submits that in contrast, Mr Lo is not a party to these proceedings; therefore, he cannot respond to Ms Ku’s evidence regarding the repudiation/cancellation of the second s 21A agreement and the alleged understanding that the agreement would not be implemented.

[35]   Mr Wilson addressed the issue of cancellation of the second s 21A agreement under the Contracts and Commercial Law Act 2017 (the CCLA), but I do not deal with his submissions in that regard. Ms Andrews made it clear that Ms Ku’s argument was that the repudiation/cancellation of the second s 21 agreement was under general contract law or equity not under the CCLA.

[36]   Mr Wilson also submits that there is an even more fundamental problem with Ms Ku’s argument in that even if the second s 21A agreement was cancelled, it does not follow Ms Ku can say the Property is absolutely hers. He submits that even if the agreement was cancelled, it does not follow that all rights and entitlements of Mr Lo in respect of the Property disappeared. He submits if the agreement is cancelled, the result is then that the relationship property rights between Ms Ku and Mr Lo have not

been resolved and remain open to be resolved and should be resolved by the Family Court.

[37]   Mr Wilson accepts that leave would need to be granted to extend the time for a relationship property application by either Ms Ku or Mr Lo. He submits that there are many cases under the PRA where leave has been granted after lengthy periods of time. He further submits that leave normally needs to be granted because if it is not granted then the relationship property rights remain unresolved which could potentially lead to an unfairness to one party and a windfall for another.

[38]   Mr Wilson submits that there is no valuation evidence before the Court and the Property is likely to be worth many times the amount of any mortgage repayments made by Ms Ku. He submits that when the Court is seeking to do justice between the parties, the starting point is to have clear identification of all relevant assets and liabilities and the value of them. He submits that is not the case here.

Contracting out agreement Mr Lo and Ms Lang

[39]   Ms Andrews submits that even if Ms Lang could establish that the second     s 21A agreement is valid or enforceable, she has the hurdle of having entered into a contracting out agreement with Mr Lo on 8 November 2005 (the contracting out agreement). The terms of that agreement included:

(a)Property owned by the parties before the relationship between the parties is not matrimonial property.

(b)Mr Lo has an interest in assets and liabilities which are listed in Schedule 1 of the contracting out agreement which states: “all property, personal and real, which are owned by [Mr Lo] or registered in [Mr Lo’s] name as at the date of this Agreement”.

(c)The Property was not owned by or registered in Mr Lo’s name at the date of the contracting out agreement and any ownership interest held by Mr Lo in the Property was before their relationship. Consequently,

Ms Lang cannot have any interest in the Property as a result of the contracting-out agreement.

[40]   In response to this issue, Mr Wilson submits that Ms Lang has applied to set aside the contracting out agreement as well as for orders granting her a right to occupy the Property and for orders determining the respective shares of the relationship property between the parties. Mr Wilson submits Ms Ku’s proper course of action is to obtain leave as a party who can be heard in that application pursuant to s 37 of the PRA, and the Family Court is the proper forum to determine rights in the Property as between all three parties.

Conclusion in respect of a reasonably arguable caveatable interest

[41]   I am of the view that Ms Lang has a reasonably arguable caveatable interest in the Property to support her notice of claim and that the notice of claim should not be removed. My reasons for this are:

(a)Mr Lo is not a party to these proceedings. In my view, the Court is not in a position to determine whether the second s 21A agreement has been repudiated/cancelled or not. As Ms Andrews submits, Mr Lo’s conduct over the last 20 years, including his applications for Government assistance, indicate he does not have an interest in the Property. However, in the absence of any evidence from Mr Lo, these indications are not conclusive of whether the agreement has been repudiated/cancelled and accordingly whether he has an interest in the Property.

(b)Ms Andrews is correct that Anderson v Anderson, Pearson v Pearson and Langer v Prowse establish that this Court can determine whether agreements pursuant to s 21A of the PRA can be repudiated or cancelled under normal contract law or equitable principles. However, in those decisions the respondent was a party to the proceedings and had a right to be heard. As noted above, Mr Lo’s conduct does indicate that the second s 21A agreement may have been repudiated/cancelled.

However, without Mr Lo being a party to these proceedings, the Court cannot make this determination and the decisions relied on by Ms Andrews are distinguishable from the present case.

(c)Even if Ms Ku could establish that the second s 21A agreement has been repudiated/cancelled, Mr Wilson is correct that this leaves the determination of the property relationship rights between Ms Ku and Mr Lo, including interests in the Property, as undetermined. These should be determined by the Family Court.

(d)Ms Lang does face the obstacle of setting aside the contracting out agreement entered into between herself and Mr Lo, for which she has made an application. However, this Court cannot make any decision as to the merits of her application, which is in the purview of the Family Court. Accordingly, it cannot be certain that her application will not succeed, leaving her in the position that she has an arguable property relationship claim against the Property resulting from her 20-year de facto relationship with Mr Lo.

Should the Court exercise its discretion to remove the notice of claim?

[42]   Having reached the view that Ms Lang’s notice of claim should not be removed as she has a reasonably arguable caveatable interest in the Property, the Court needs to consider whether it should nevertheless exercise its discretion to remove the notice of claim.

[43]   As noted at [21], the Court’s discretion must be exercised cautiously. Before exercising the discretion to remove the notice, the Court must be completely satisfied that removal would not prejudice the caveator’s legitimate interests.

[44]   I am of the view that the Court should not exercise its discretion to remove the notice. If the notice is removed, Ms Ku will be able to sell the Property and this would be clearly prejudicial to Ms Lang’s claimed interest in it. The notice of claim must

remain to protect that interest until the rights of the parties in the Property are determined by the Family Court.

Unlawful occupier

[45]   Ms Ku asserts that Ms Lang is an unlawful occupier of the Property on the basis that Ms Lang continues to occupy the Property, refuses to leave the Property, occupies the Property without Ms Ku’s consent, and Ms Ku as the registered proprietor is entitled to exclude all other persons from the Property. On that basis, Ms Ku seeks a summary judgment order, pursuant to Part 13 of the Rules, for possession of the Property.

[46]   Mr Wilson submits that Ms Lang occupies the home by reason of it being the family home for herself and Mr Lo since February 2003. He submits that her occupation has been with the agreement of Mr Lo and that agreement was given by Mr Lo in his capacity as beneficial owner of the Property. Mr Wilson submits that her occupation of 20 years may have given Ms Lang adverse possession rights, but rather than making a claim of adverse possession, Ms Lang’ s primary position is that the rights of the parties in respect of the Property should be resolved in the Family Court.

Conclusion in respect of unlawful occupier

[47]   Ms Lang’s right to occupy the Property depends upon her occupying the Property with the agreement of Mr Lo, and his rights to the Property in turn depends upon resolving the property relationship issues between him and Ms Ku. The Court is not in a position to resolve Ms Lang’s position as an occupier of the Property until the property relationship rights between the three parties have been resolved.

[48]   The potential rights Ms Lang may have as an adverse occupier have not been argued before this Court in these proceedings.

[49]   Ms Lang’s position as an invitee of Mr Lo depends on Mr Lo’s interest in the Property being determined, and the issue of Ms Lang’s rights as an adverse occupier

has not been argued before the Court. The Court cannot issue a summary judgment order for possession in favour of Ms Ku.

Result

[50]   As a result of the conclusions I have reached at [41] and [44], Ms Ku’s application for removal of the notice of claim lodged by Ms Lang should be declined.

[51]   In addition, as a result the conclusion I have reached at [49], Ms Ku’s application for an order for possession of the Property under r 13 of the Rules should be declined.

Orders

[52]I make the following orders:

(a)Ms Ku’s applications for summary judgment orders:

(i)Removing the notice of claim lodged by Ms Lang; and

(ii)    For possession of the Property pursuant to Part 13 of the Rules; are dismissed.

(b)As Ms Lang is the successful party, costs should follow the event. Counsel are directed to endeavour to agree costs and failing agreement being reached within a period of 20 working days from the date of this judgment, counsel for Ms Lang will file a memorandum as to costs (not exceeding five pages) within 5 working days after the expiry of the 20 working day period, and counsel for Ms Ku will file a memorandum (not to exceed five pages) in response within 5 working days of receipt of counsel for Ms Lang’s memorandum. A decision as to costs will then be made on the papers.

………………………..

Associate Judge Taylor